Animal Spirits How Human Psychology Drives The Economy

Since the financial crisis burst, there have been various theories about whom to blame for it and who is the main person or institution responsible for this crisis which still has effects upon the entire population from all over the world. Professors George A. Akerlof and Robert J. Shiller are two recognized economists who made numerous pieces of research to emphasize the link between Economics and Psychology. In their book Akerlof and Shiller introduce the concept of â€Å"animal spirits† and how the world’s economy is driven by this. According with their view, these â€Å"animal spirits† are composed of: confidence, fairness, antisocial behaviour, money illusion and stories. Throughout the book, the authors aim to prove that economists tend to minimize the relevance of the emotional factors and they affirm that a lot of questions about the Finance industry can be answered if people took into consideration that the â€Å"animal spirits† had a strong impact on the economy overall. The book â€Å"Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism† written by George A. Akerlof and Robert J. Shiller is split in 2 parts. In the first part the authors explain the meaning of â€Å"animal spirits†, term which was coined by J. M. Keynes. In the first five chapters the authors explain in detail the 5 key components of the animal spirits: confidence, fairness, corruption, money illusion and stories. In the second part of the book, the authors use the concept ofShow MoreRelatedUsing Emotions Help Explain The Economy1796 Words   |  8 PagesHelp Explain the Economy When examining the economy, many economists assume that economic contributors make their decisions as unemotional rational beings. John Maynard Keynes, one of the most influential economists of the 20th century, was one of the driving forces in a revolution of economic thinking. 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Exodus 22:18- Thou shalt not suffer a witch to live Leviticus   20:27- A man also or woman that hath a familiar spirit, or that is a wizard, shall surely be put to death: they shall stone them with